Thames Water’s shareholders are providing conditional cash injections, causing a £250 million shortfall in the £1 billion minimum required by regulator Ofwat before 2025. However, Thames Water claims that the remaining amount will be phased in and expects an additional £2.5 billion injection from shareholders in the next regulatory period. Despite this, the recent funding announcement was labeled a “major milestone” by the new chief executives, although it comes with significant conditions attached. In order to receive the £750 million, Thames Water must present a business plan for a more focused turnaround and gain support from appropriate regulatory arrangements. Similar conditions apply to the £2.5 billion. This announcement suggests that Thames Water is still dealing with funding uncertainties, although the threat of special administration has diminished. The company’s financial stability will only be confirmed once the cash is received. Notably, the upcoming business plan will be the third since the end of Macquarie’s ownership, with a focus on prioritization. However, it remains unclear what Thames wishes to deprioritize. The announcement highlights the importance of the next regulatory price review, which will determine the sector’s long-term future. While Thames Water’s shareholders are likely to provide the required funding for the review, they are hesitant to commit to the full £2.5 billion until they know the extent of allowances and have more confidence in the company’s management. The funding uncertainty continues to be a challenging situation for Thames Water.
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